Markets

Amazon Launches Online Store to Expand in Southeast Asia

Amazon AMZN recently launched a local online store in Singapore, namely Amazon.sg, on the back of e-commerce strength. This move enables customers to shop with the e-commerce behemoth in Singapore on desktop, mobile browser and shopping app.

Small and medium-sized businesses can offer products to online shoppers with Amazon.sg. This will enhance the offerings provided by the store, in turn expanding the business’ customer base. Consequently, this will drive the company’s top line.

The new store is inline with its strategy of expanding on an international basis. The store will offer thousands of products, which will include international brands such as Bose, Fisher Price, KitchenAid, L'Oreal, and Spigen, as well as products from Singapore businesses including Biofinest, Creative, KeaBabies and Skin Inc.

We believe the latest move of Amazon will further strengthen the already booming e-commerce business.

Further, the company’s investment in Singapore might help it take the next step in Southeast Asia, where it will now be in a better position to compete with rivals such as Lazada, the e-commerce site owned by Alibaba BABA and Shopee.

Amazon.com, Inc. Price and Consensus

 

Amazon.com, Inc. Price and Consensus

Amazon.com, Inc. price-consensus-chart | Amazon.com, Inc. Quote

Why Singapore?

Historically, Southeast Asian countries have attracted investors from across the globe, thanks to solid growth rates, booming population and good governance. In fact, Southeast Asia has started attracting attention due to increasing growth of internet services.

With this recent investment in Singapore, Amazon — which is aggressively strengthening the e-commerce business — will boost presence in a nascent but populous online retail market. According to a Statista report, the e-commerce market in Singapore is expected to generate $4.9 million revenues in 2019 and the figure is anticipated to reach $8.5 million by 2023 at a CAGR of 14.9%. Further, worldwide user penetration in this space in 2019 is expected to be 69.3% and the same for 2023 is projected at 73.2%.

In 2017, the e-commerce giant had ventured into Southeast Asia with the launch of Prime Now — its two-hour delivery window — in Singapore. Prime Now focuses mainly on groceries and household essentials.

However, the latest move will give shoppers an access to millions of products across different categories including books, video games, baby and toys, home and kitchenware, as well as consumer electronics.

Amazon's Aggressive Stance

Amazon’s aggressive retail strategies, expanding seller base, distribution strength, strategic acquisitions and partnerships are likely to continue aiding its dominant position in the e-commerce market.

Further, Amazon’s strong focus on advancement of Prime services with the help of customer-oriented benefits and savings, expanding grocery delivery and pick-up services, as well as growing movie and video content portfolio remain key growth drivers.

Additionally, its expanding global footprint is aiding online retail business growth. Recently, the company initiated direct sales of merchandise by establishing in-house fulfilment and delivery network in Brazil.

Notably, Amazon’s same-day delivery service is already available in Mexico. This boosts its international presence.

All these strong endeavors are likely to provide Amazon an edge in the delivery battle and help it sustain its dominant e-commerce position.

Zacks Rank & Stocks to Consider

Amazon currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the broader technology sector include Booking Holdings Inc. BKNG and Itron, Inc. ITRI, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Long-term earnings growth for Booking Holdings and Itron is currently projected at 13.1% and 25%, respectively.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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